While the number of housing units to date that have come from office conversions is modest compared with other types of development, many public officials would like to change that, according to CNBC, making it easier for developers to convert underutilized office buildings into residential apartments.
Currently, development costs, particularly those related to building standards and zoning codes, can make such conversions a challenge to finance. But some cities are looking at making changes to their zoning and offering tax abatements to developers that build new housing.
Cities like Philadelphia have previously embraced these policies to revitalize their downtowns. In Philadelphia, homeowners and investors received more than $1 billion in tax breaks for their renovation projects.
A small collective of developers have taken on this challenging slice of the real estate business. Since 2000, 498 buildings have been converted in the U.S., creating 49,390 new housing units through the final quarter of 2022, according to real estate services firm CBRE.